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Bevin’s Budget Slashing Kentucky’s Future

Budget Should Address Liabilities and Invest in Future

Cuts to Community Colleges Mean Disinvestment in Kentucky’s Primary Workforce Development Source

Governor Bevin’s interest in investing in workforce development is a notable priority. However, the approach outlined in his budget proposal decreases investment in the state’s primary site of workforce development: its community colleges.

The Kentucky Community and Technical College System (KCTCS) is by far the state’s largest workforce development program. In 2015 the state budgeted $185.9 million for academic programs and employer services and an additional $5.6 million specifically for workforce development and training at KCTCS, according to the Legislative Research Commission’s Office of Budget Review. That far exceeds spending on other state-funded workforce programs, the largest of which are career and technical education for youth and incumbent workers ($43.8 million), vocational rehabilitation ($11.5 million for Kentuckians with disabilities and $1.3 million for other vocational rehabilitation services in 2015) and adult education ($20 million). KCTCS receives 70 percent of all state workforce development funds.

The mission of KCTCS and its state mandate, as set out in the Postsecondary Education Improvement Act of 1997 (HB1), is to provide the training necessary to develop a workforce with the skills to meet the needs of new and existing industries — which increasingly require at least some higher education. Between 2005 and 2014, KCTCS awarded 243,421 degrees and credentials. In addition, in 2015 alone KCTCS provided customized workforce training for a total of 40,000 employees at 5,500 businesses, according to a recent presentation to a House budget review subcommittee.

Kentucky’s community colleges have also been innovators in the “career pathways” workforce development model. Career pathways provide “a series of connected education and training programs and support services that enable individuals to secure employment within a specific industry or occupational sector, and to advance over time to successively higher levels of education and employment in that sector.” Many of the career pathways programs at KCTCS have been designed to address the growing need for trained workers in the healthcare sector. Other KCTCS career pathways initiatives are in information technology and manufacturing and industrial technology. These programs not only help fill the state’s workforce needs but also ensure that those with low skills and low levels of education — who are often also low-income — can access these job opportunities.

However, at the same time that Kentucky’s community colleges are engaging in such important workforce development efforts, the state has continued to cut their budgets — by 27 percent between 2008 and 2016, in inflation-adjusted terms. In order to partially compensate for these cuts, community college tuition and fees in Kentucky have increased to the highest levels in the region.

Rather than increase investment in such a key site of state workforce development, the governor is proposing to further cut the community colleges. In order to attempt to manage these deep cuts, KCTCS estimates it would have to increase tuition by 8.8 percent in 2017 – as reported to a House budget review subcommittee. Without such a high tuition increase, KCTCS reports that 539 faculty and staff would have to lose their jobs and 61 programs would be cut, on top of services being reduced or eliminated. Such cuts threaten the ability of KCTCS to effectively develop the state’s workforce. They not only impact students’ ability to afford to go to/stay in school but could also reduce support services, which are critical to success for many community college students.

Infographic: Kentucky Higher Education Cuts Among Worst in Country

Even as most states have begun to restore funding for higher education after cuts during the recession, Kentucky has continued to reduce funding as outlined a report from the Center on Budget and Policy Priorities. Continued cuts will make it harder for the state to grow and attract businesses that rely on a well-educated workforce.  To reverse these disturbing trends, Kentucky needs to make higher education a greater priority. In order to make sure the Commonwealth has enough money to fund higher education adequately, lawmakers need to commit to revenue-raising tax policies rather than tax breaks like the state’s recent expansion of its film tax credits, which will cost the state millions of dollars each year.

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Tuition Freeze Is Not Proper Answer to College Affordability Problem Given Large, Continuous Budget Cuts

With the steep increases in tuition at Kentucky’s public universities and community colleges in recent years, a state mandated tuition freeze as proposed in SB 75 might sound like a good idea. But even with past tuition increases, the state’s higher education institutions are facing significant funding shortfalls once the growth in fixed costs like health insurance and utilities, on top of General Fund cuts, are taken into consideration.

Even while additional state cuts to higher education are being proposed, proponents of a tuition freeze assert that Kentucky’s public universities and community colleges are well funded as a result of prior tuition hikes. However, according to a recent presentation by Kentucky’s Council on Postsecondary Education (CPE) to a House budget review subcommittee, the cumulative increase in revenue collected from tuition and fees does not cover the cumulative growth in costs plus the cuts in General Fund dollars to the institutions. The graph below, presented by CPE, illustrates this:

CPE

As shown in the graph, between 2008 and 2015, the cumulative increase in tuition and fee revenue at the state’s public universities and community colleges was $2.5 billion. When cumulative General Fund cuts to these institutions ($899 million) and fixed cost increases ($1.9 billion) are taken into account — for instance, for health insurance ($620 million) pension contributions ($175 million) and other fixed costs ($1.15 billion) including utilities, contractual obligations, equipment, licenses and permits, workers’ compensation and unemployment compensation — there is still a funding shortfall. It worsens the problem that the state also stopped covering maintenance and operation costs for new facilities — for instance, janitorial staff, security and routine repairs — so these services now have to be covered by the institutions. CPE also reported another cost increase is growth in institutional financial aid for students.

As we have heard from the state’s university and community college presidents in the past, budget cuts not only lead to additional tuition increases but also other cost-saving actions that can compromise the quality of education provided to students — for instance, cutting back on staff and over-relying on part-time faculty. It can also affect the mission of the universities — such as more focus on recruiting out-of-state students who pay higher tuition (the share of UK undergraduates who are out of state rose from 18 percent in 2005 to 29 percent in 2014).

It’s wrong to suggest that the big disinvestment our state has made in higher education — if the governor’s cuts go into effect, a total of 35 percent decline in funding since 2008 once inflation is taken into account — won’t result in big tuition increases and that simply halting those increases somehow solves the problem.

What Would Budget Cuts to the Attorney General and Board of Elections Mean?

Many Kentuckians may not be aware of the important role that some state agencies play in our everyday lives. When we hear about proposed cuts to the Attorney General, Secretary of State or the Board of Elections, for instance, we may not be particularly concerned. But these agencies play critical roles in protecting the public and safeguarding democracy in our state.

Kentucky’s Attorney General is tasked with:

  • Addressing Kentucky’s drug epidemic through enforcement and by directing settlement proceeds to drug treatment programs.
  • Prosecuting crimes — i.e., public corruption investigations and convictions; serving as special counsel in murder, drug, child abuse and other cases; and providing support to state prosecutors.
  • Participating in other criminal investigations including elder abuse, voter fraud and social security and disability fraud.
  • Recovering Medicaid dollars from healthcare providers who fraudulently bill or abuse the Medicaid system — $70 million over the last two years.
  • Helping Kentuckians avoid more than $234 million in unreasonable rate increases (i.e., for utilities).
  • Providing financial relief for Kentuckians’ subject to fraud — $16 million to Kentucky students related to career colleges and $4 million for customers for unauthorized cell phone charges, as just two examples.
  • Recovering money that can be used for addiction treatment, Kentucky Retirement Systems and providing debt relief to victims of predatory lenders.

Kentucky’s Office of the Attorney General has already been cut 25 percent since 2008 — or 35 percent when inflation is taken into account. According to a presentation at a recent House budget review subcommittee meeting, the impact of the new cuts in the Governor’s proposed budget would mean:

AG

Kentucky’s State Board of Elections, which falls under the Secretary of State, is charged with:

  • Guaranteeing county clerks, county boards of elections and other officials are adequately trained.
  • Fulfilling both federal and state statutory election requirements.
  • Preventing voters from being disenfranchised.
  • Preventing unnecessary state and federal litigation over the validity of elections.

According to a recent presentation by the Secretary of State to a House budget review subcommittee, the proposed budget does not support the infrastructure needed to conduct elections and could cause harm to the integrity of the election process. Past budget cuts have already hindered the agency’s ability to meet and achieve its statutory purposes. Counties are having to figure out how to make up for less than statutorily required reimbursement rates for expenses such as the necessary office personnel to conduct elections.

And there have been new costs occurring at the same time the budget has been cut. In 2016, 29 unbudgeted special elections will have occurred, and there are additional associated costs for Office of Technology services, special roster paper, printing and shipping precinct signature rosters — and postage rates have increased twice in the last year. Also, additional personnel is needed for a purge program to maintain the integrity of the state’s voter registration rolls, which is required by the National Voter Registration Act and the Help America Vote Act.

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